India's cotton imports are likely to rise by 80 per cent this crop year (October 2018 to September 2019), due to short supply of quality material for textile mills.
Data compiled by apex industry body, Cotton Association of India (CAI), forecasts raw cotton import at 2.7 million bales (one bale equals 170 kg) for the season, compared to 1.5 million the previous year. Another industry body, Confederation of Indian Textile Industry (CITI), has estimated total import at 2.4 million bales.
With an estimated 32.1 million bales of output, revised downward by CAI in April from its previous one of 32.8 million, India is the top global producer. Even so, textile mills are importing raw cotton this year, not specialised cotton as in previous years. India imports from America and African countries, among others.
"The major reason is unavailability of the fibre with farmers and stockists. Drought in the major growing states of Maharashtra, Telangana, Gujarat and Andhra Pradesh last year has resulted in lower output this year. Over and above, the quality of late picked crop is poor due to the paucity of moisture in the field. This poor quality cotton cannot be used for spinning mills," said Atul Ganatra, president of CAI.
In fact, farmers are reported to have uprooted their cotton plants in 70-80 per cent of the sown area due to scarcity of water, ahead of the crucial third and fourth pickings. The quality started deteriorating since the second round of picking in early February.
Normally, India's total consumption is 32 million bales. A deficit can be bridged with carryover stock, which CITI estimates at 3.6 million bales from the previous year, and import. "Though we have a smaller crop size this year, the supply position is very comfortable with a big ending stock of four million bales for the next season. Thanks to a big opening stock, smaller exports and large imports, the production deficit is well covered. Government-owned Cotton Corporation of India (CCI) has also started selling its stock, which will further increase liquidity in the market," said Sanjay Jain, chairman, CITI.
Trade sources estimate 4.7 million bales of stock in godowns of the CCI, multinational companies, ginners and the Multi Commodity Exchange, as of end-March. Our export is estimated to decline to 4.7 million bales in 2018-19, from 6.9 million last year. Rising prices of Indian cotton have made export uncompetitive.
Trade sources say CAI recently convened a meeting of cotton traders and spinning mills to devise a strategy for selling its inventory. According to it, stock held by mills as of end-March is 4.6 million bales. This means less than two months of inventory but new season arrivals come in September.
Source :- Business-standard.com